Step-by-step guide to buying your first home
Guide for first-time buyers
Buying your first home is a long and intense process, with approximately 874,000 active first-time buyers across the UK within the last year. Purchasing a home is an important financial decision, and it’s beneficial to get acquainted with the home-buying process and stay ahead of the curve.
We help first-time buyers each day move into their new homes at Sky-House Co., which is why we have crafted a helpful buying guide for first-time buyers and the home-owning journey.
Who is a first-time buyer?
A first-time buyer is any individual looking to own their first home and has never previously or currently owned a residential property within the UK or any other country. In the UK, this also includes those who have not inherited or jointly owned a property before, as these circumstances may disqualify you from being considered a first-time buyer under government schemes.
Understanding mortgages
A mortgage is a loan from a bank or building society used to purchase a property or plot of land. The average mortgage term duration is 25 years, but this can be lengthened or shortened depending on your preference and affordability. A mortgage will cover the remaining property value after your deposit contribution.
It’s crucial to understand how much you can afford each month in outgoings. In extreme cases, if repayments are not up to date, it can give the lender power to take legal action against you, potentially repossessing your property.
Loan to Value (LTV)
The loan-to-value ratio is referenced throughout the home-buying process. LTV states the financial difference between the mortgage loan and the property’s value. For example, purchasing a property worth £200,000 would typically require a 10% deposit of £20,000. This difference leaves a remaining 90% of the property value, equating to £180,000 and resulting in the LTV being 90%.
First Homes scheme
Government first-time buyer schemes offer attractive benefits, the latest being the First Homes scheme, which discounts new-build homes for individuals who cannot afford the full mortgage on their income. The incentive provides a discount between 30-50% less than the property’s market value and must be applied for through the local council.
Shared ownership
In situations where a buyer cannot borrow the full amount required for a property, shared ownership could be a viable option. The buyer takes out a mortgage for a portion of the property value and ownership, typically between 10% and 75%. The buyer is then entitled to pay rent for the rest of the remaining value.
Guarantor mortgage
Guarantor mortgages offer extra financial security for individuals who struggle to obtain the mortgage required. This option requires a named individual with the financial means, such as parents or a close individual, to cover your monthly mortgage repayments if you cannot.
How much deposit do I need?
A deposit is acquired from personal savings and used towards your home, informing lenders that you are a serious buyer. The standard across most lenders is an expectation of at least a 10% deposit. However, this varies, and 5% deposits are accepted by some lenders, especially for first-time buyers.
Typically, the higher the deposit, the lower the interest rate. Alongside this, you will generally have a shorter repayment period and the chance to utilise a broader range of mortgage offers across lenders.
Considerations for first-time buyers
Freehold vs leasehold properties
A freehold property means you own the house and the land it is built on. A leasehold property does not include the land as part of the purchase, giving you ownership for a set number of years. Rent is paid to the landowner whilst it is occupied, and it is important to understand how many years the lease has remaining before making a purchase.
Stamp Duty Land Tax
As a first-time buyer, you generally have access to ‘first-time buyer relief’ from stamp duty, depending on where you are in the UK. From April 1st 2025, first-time buyers in England and Northern Ireland will not have to pay stamp duty on properties valued up to £300,000, with 5% applying to homes above this threshold.
Exceptions within the first-time buyer process
Inheriting a property can affect your first-time buyer status, mitigating the chance of obtaining first-time buyer benefits. If it has been several years since you owned a property, some lenders may consider you a first-time buyer again. However, government schemes are unlikely to apply.
The house-buying process
Before purchasing a property, it’s essential to understand how the house-buying process works and the considerations required.
Check your eligibility
Aim to keep your finances clean before going to a mortgage lender, ensuring no negative debts reflect on your account. A good credit score can increase your chances of being accepted for a loan.
Affordability
Consider your savings and existing outgoings. It’s advisable to conduct your own ‘stress test’ which determines if you can meet your monthly repayments should interest rates increase, or if you’re suddenly on a lower income. A mortgage in principle helps speed up the process, pre-approving your eligibility to lenders that you can afford a mortgage loan.
Viewing properties and making offers
The home hunting journey can be a long process, with several factors affecting the buying journey. Generally, new-build homes are quicker to purchase due to no chains and less uncertainty during the exchange. Once you’re ready, make an offer on the property within your budget and consider negotiating with the seller if they’re flexible.
Mortgage type
Several mortgages are available on the market, including fixed-rate and variable-rate mortgages. The different mortgages offer pros and cons depending on the market and property, a professional mortgage broker can advise you on the option most suitable for you.
Property survey
When buying a house, it’s essential to hire a solicitor or conveyancer who will legally transfer the property to you. A solicitor will take control of the paperwork and conduct surveys on the property to ensure it’s in good standing. This can cost up to £1,500 for older homes, and as little as nothing for new-build properties.
Exchange contracts
An exchange of contracts is when you pay your deposit and are legally ready to move into the property. You will need to wait until the property build is complete and has passed the quality checks until you can licitly complete on your new home.
Sky-House Co. are here for you
Our team at Sky-House Co. understands that buying your first home can be a complex and arduous process. Our mission is to help people start living and let the stress melt away, offering guidance along the journey to find your perfect future home.
Our new-build developments ensure innovative, sustainable and airy homes, designed for modern living and producing beautiful communities. We offer different ways to buy, from part exchange to key worker discount. If you’re a first-time buyer looking for support, get in touch with a member of our friendly team and discover our neighbourhoods today!
Choosing a Sky House really was the best decision. My Sky House is completely different to all new build homes and that's why I love it. Hassle free with all the extra details. Of course, the economic values are great but the roof terrace is the perfect touch and my favourite part.
I love the sense of space and light. I like how every part of the house has a purpose and feels different in its own right. I think one of my favourite spaces is the landing. It could easily have just been an after thought - but I like that it feels like an extra little room to sit and read or just chill in.
The houses are lovely and much higher quality finish than other new build homes.
I love the design of my new house and all its features. You definitely create attractive modern housing.
Nice developments that stand out from the usual new build sites.
